ISSN 0542-5492 Second Session - Thirty-Second Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on PUBLIC UTILI TIES and NATUR AL RESOURCES 31-32 Elizabeth 11 Chairman Mr. A. Anstett Constituency of Springfie/d VOL. XXXI No. 8 - 10:15 a.m., THURSDAY, 14 JULY, 1983. Printed by the Office of the Queens Printer, Provmce or Manitoba

MAN ITOBA LEGISLATIVE ASSEMBLY Thirty-Second Legislature Members, Constituencies and Political Affi liation Name ADAM, Hon. A.R. (Pete) ANSTETT, Andy ASHTON, Steve BANMAN, Robert (Bob) BLAKE, David R. (Dave) BROWN, Arnold BUCKLASCHUK, Hon. John M. CARROLL, Q.C., Henry N. CORRIN, Brian COWAN, Hon. Jay DESJARDINS, Hon. Laurent DODICK, Doreen DOERN, Russell DOLIN, Hon. Mary Beth DOWNEY, James E. DRIEDGER, Albert ENNS, �:_:ry EVANS, Hon. Leonard S. EYLER,Phil FILMON, Gary FOX, Peter GOURLAY, D.M. (Doug) GRAHAM, Harry HAMMOND, Gerrie HARAPIAK, Harry M. HARPER, Elijah HEMPHILL, Hon. Maureen HYDE, Lloyd JOHNSTON, J.

Frank KOSTYRA, Hon. Eugene KOVNATS, Abe LECUYER, Gerard LYON, Q.C., Hon. Sterling MACKLING, Q.C., Hon. AI MALINOWSKI, Donald M. MANNESS, Clayton McKENZIE, J. Wally MERCIER, Q.C., GJN.J. (Gerry) NORDMAN, Rurik (Ric) OLESON, Charlotte ORCHARD, Donald PAWLEY, Q.C., Hon. Howard R. PARASIUK, Hon. Wilson PENNER, Q.C., Hon. Roland PHILLIPS, Myrna A. PLOHMAN, Hon. John RANSOM, A. Brian SANTOS, Conrad SCHROEDER, Hon. Vie SCOTT, Don SHERMAN, L.R. (Bud) SMITH, Hon. Muriel STEEN, Warren STORIE, Hon. Jerry T. URUSKI, Hon. Bill USKIW, Hon. Samuel WALDING, Hon. D. James Constit uency Ste.

Rose Springfield Thomps on La Verendrye Min nedosa Rhin eland Gi mli Bran don West Ellice Chu rchill St. Boniface Riel Elm wood Ki ldonan Arthur Emerson Lakeside Bran don East River East Tuxedo Concordi a Swan River Vir den Kir kfield Park The Pa s Rupertsla nd Log a n Po rtage la Pr ai rie Sturgeon Creek Seven Oaks Nia kwa Radisson Cha r leswood St. Ja mes St. Johns Morris Roblin-Rus sell St. Norbert Assinib oi a Glad stone Pembin a Selkirk Transcona Fort Rou ge Wo lseley Dauphin Turtle Mo untain Burrows Rossmere lnkster Fort Garry Os borne River Heights Flin Flon lnterlake Lac du Bonnet St.

Vita l Party NDP NDP NDP PC PC PC NDP INO NDP NDP NDP NDP NDP NDP PC PC PC NDP NDP PC NDP PC PC PC NDP NDP NDP PC PC NDP PC NDP PC NDP NDP PC PC PC PC PC PC NDP NDP NDP NDP NDP PC NDP NDP NDP PC NDP PC NDP NDP NDP NDP

I LEGISLATIVE ASSEMBLY OF MAN ITOBA THE STANDING COMMITTEE ON PUBLIC UTILITIES AN D NATURAL RESOURCES Thursday, 14 July, 1983 TIME - 10:15 a.m. LOCATION - Winnipeg CHAIRMAN - Mr. Andy Anstett (Springfield) ATTENDANCE - QUORUM - 6 Members of the Committee present: Messrs. Anstett, Doern, Enns, Eyler, Ha rapiak, Orchard, Ransom and Scott APPEARING: Mr. Go rdon W. Ho lland, General Manager Mr . Saul Mil ler, Chairman of the Board Mr . S.G . Ande rson, Assistant Ge neral Ma nager MATTERS UNDER DISCUSSION: Annual Report of the Manitoba Telephone System for the fiscal year ending March 31, 1982 MR.

CHAIRMAN: The busine ss before the commit tee today is consideration of the Manitoba Telephone System Annua l Report for 1981-82. I believe certain questions were raised at the last meeting so I'll ask the Minis ter if he or staff, have answers for those questions. Mr . Mini ster . HON. J. PLOHMAN: Mr .

Chairman, I have the answer to a question that was rai sed in the Ho us e on two occasions by the Member for Pembina, and I'd like to provide that information, and then if there are other answers that the General Manager has with regard to any qu estions tha t were asked at the previo us committee meeting, they can be provided as well. In terms of the number of dishes, the member had asked about the number that the Telephone System currently owns for CATV signals ; there's 12 that are in us e on a full-time or intermittent basis. Two of these dishes are also us ed in the provision of telephoning service.

One dish is installed in anticipation of us e in the near future for the provision of telephoning service which wou ld be 13; and 5 dishes are avai lable -I sho uld say 13 in total, the 12 I just mentioned plus the 1 that is installed for anticipation of us e -and 5 are avai lable for testing, spare and stock. If the ho nou rable member wants to know the locations and so on, I can provide that in formation as well, although I don't think that was asked. I think if the member would like that in formation he can so advise. MR. CHAIRMAN: Mr. Orchard. MR. D. ORCHARD: Mr .

Chairman, I thank the Min ister for the answer and he can provide me by letter. I 133 pres u me if he's got the list of where the locations are , that wou ld be fine. We woul dn't take committee time to read them ou t. HON. J. PLOHMAN: That's very good. If there are other questions that the General Manager has answers for, then I'd be prepared to turn that over to Mr . Ho lland. MR. CHAIRMAN: Mr . Pl oh man, are you planning on providing a list of the locations of the dishes to the Member for Pembina? Was that the indication you gave? HON. J. PLOHMAN: Well, he just asked and I said yes, that's fine, I'll do that.

MR. CHAIRMAN: I woul d su ggest, Mr . Pl oh man, then, that the list sho ul d be tabled to the commit tee so that the Comm ittee Clerk has it in the committee records as information provided to the commit tee. Mr . Ho lland. MR. G. HOLLAND: Mr . Chairman, there were a few questions asked at the last meeting. One of them was a his tory of MTS rate increases since 1975.

There was an increase effective May 13, 1976, the annu alized dollar incr ease in revenu e was $1 5.2 mil li on , and tha t represented a 13 percent increase expressed as a total of MTS annual revenues; another increase was effective April 1, 1979 , the annualized dollar revenue increase, $1 0.8 million, and that represented a 5.9 percent increase on total revenues ; July 15, 1982, annualized dollar revenue increase $1 2 million, 4.5 percent of total revenues; and an increase effective July 1, 1983 will produce $9,989,000 in the current fiscal year , being 3.3 percent of total revenues , and the annualized figure wou ld be appro xi mately $1 3 million.

As well, Mr . Chairm an, there were qu estions concerning the im pact of provincial tax increases on 19 83-84 expenses. The provincial payroll tax , $1 ,965,000 annually; the provincial sales tax increase is an identifiable $48,000, but there will also be un identifiable increases on the constr uction budget arising from the applicability of the tax, to equipment and material pu rch ases from ou r su ppl iers. Mr . Chairman, I've ju st been reminded that I incorrectly described that tax; it is the Health and Education Levy, which is $1 ,965,000 annua lly.

Fuel taxes, between Ja nuary 1982 and Ma rch 1983, it's estima ted that the incr eased taxes have been $32,000, and these increases are antici pated for the total 1983-84 fiscal year, to raise the MTS fuel bill by some $81, 000.00. There was a question, Mr. Chairman, as to the number of retirements at MTS; 27 employees retired between August 1, 1982 and Februa ry 28, 1983; and 11 3 emplo yees retired between March 1, 1983 and June 30, 1983. On term emplo yment where questions were also raised; there were 100 term emp loyees hired for the

Thursday, 14 July, 1983 su mm er of 19 82, exclud ing stu dents; 57 term employees, includ ing 47 stu dents; an d 76 pa rt-time emplo yees were hired between April 1s t an d Ju ne 30th of this year. The 76 pa rt-time employees ar e primarily in ou r traffic oper at ions an d in the business office for seas ona l load s an d the vacation period. On su mmer stud ents, there were 64 st ud ents hired in the su mmer of 19 82, 18 of whom were terminated prior to Au gus t 20, 19 82. Our plan was to hire between 45 an d 50 stud ents for su mmer, 19 83, an d 47 stu dents were hired from April 1 to Ju ne 30. Also, Mr.

Chai rman, a question ar ose as to some bro ad forecast figures for the Saudi Ara bian Computer Comm un icat ions Co. Ltd. The sa les revenue projection from Ju ne, 19 83 to Decemb er 19 83 is between $3,250,000 an d $4,311 ,000 - a ra nge in that ar ea -an d the resu ltan t net income is projected to be from $320,000 to $431 ,000.00. I believe, Mr. Cha irm a n, that those were all of the questions raised at the last meeting. MR. CHAIRMAN: Any further discus sion on the answers Mr . Ho llan d's provided or further discus sion on the report? Mr . Orchard. MR. D. ORCHARD: Mr . Cha irm an , I thank Mr.

Ho lland for his an swers. lt wou ld ap pear as if a generous 50 percent of this recent ra te incr ease is dir ectly attrib uta ble to the combination of new or in cre ased taxes im p osed by the NDP an d their in terference last su mmer in management decisions on how best to cut costs, an d I think that ad equately proves the position I was establishing last time that this government is having a negat ive imp act on the Telephone System. Mr . Chai r man, a coup le of questions that I'd like to as k on MTX. We were just getting into MTX last time.

To un dertake the business ar rangement in Saudi Arab ia , were there any su ch things as finders' fees or any oblig ati ons un derta ken to secure a bu si ness ar ra ngement in Saudi Ara bia? MR. G. HOLLAND: Mr. Chai rman , there were no su ch fees; there were some legal fees, I believe, in connection with legal processes in Saudi Ara bia. MR. D. ORCHARD: I wonder if Mr. Ho llan d might ind icat e the Ge neral Ma nager, Mr . Aysan 's compensat ion package, sa lary an d expense allowance. I realize he prob a bly won't have those figures read ily at his dispos al an d they could be provided at a later date. MR. G.

HOLLAND: Mr . Cha irm an , we'll un dertake to do that. Mr . Ays a n is an employee dir ectly of Datacom. Generally ou r compensation package ;,as been modeled after the Bell Ca nada pa tterns established over a number of years in Saudi Arab ia , so that ou r general pa y patterns an d working conditions have followed that precedent. MR. D. ORCHARD: My colleague has a coup le of questions. MR. CHAIRMAN: Mr . Filmon. MR. G. FILMON: Thank you, Mr . Cha irm an.

Just in following up the discus sion on MTX, an d I'm not su re 134 whether an y of this had been covered before in commit tee, but I'll pu rsu e it an d if an swers have been given I'll be quite happy to read them in Ha nsar d. Ca n Mr . Ho lland ind icate what activities MTX has been pu rs ui ng in the Mid -Eas t ar ea; that is what type of work? There's some work in Saud i Arab ia ; 1 un dersta nd that there is some work contemplated in Leban on, an d so on. Ca n that be ju st sort of su mmar ized for me? MR. G. HOLLAND: Mr. Chai rman , MTX was formed in Ja nuary, 19 82.

Pr ior to that, MTS had been acting as a contractor for AI Bassa n Interna tion a l Telecom. That had involved engineering projects, identifying su ppl iers, developing prop osa ls to customers, pr ov idin g as si stance on installation, maintena nce procedu res and so on to Telecom. Thro ugh the period ending March 31 , 1983, sa les of products by MTX tota lled some $3,924,000.00 . Most of their activities were in volved in working with Telecom Saudi Ara bia. MR. G. FILMON: Is this ju st a matter of sel ling hardwar e, when you say sa les of produ cts, or is there more to it than that ?

I am told that one of the activities of MTX is in the rep l<�cement or rehabilit at ion of the telephone system in Beirut. Is that something that merely a bid has been placed on, or is that the contract that MTX has, or at what sta ge is that? MR. G. HOLLAND: Mr . Cha irm a n, Telecom has looked at the great telecommu nicat ions needs of Leban on an d have as ked inform a lly for MTX's views as to the feas ibility of a propos al or a project there. No decision has been taken in that ar ea. In the meantime, I believe that at least one American firm is doing work in Leba non. MR. G.

FILMON: Who is Telecom an d what is their relat ionship to MTX? MR. G. HOLLAND: Telecom is a compa ny totally owned by AI Bassa n Internat io nal. The MTX relat ionship to them is as a contractor-supplier , engineering services, provision of main tenance ad vice. MR. G. FILMON: Who owns AI Bassa n Internat ion al? MR. G. HOLLAND: Mr. Cha irm a n, I did provide the name of the princip al. Sheik Abdu llah is the head of that fami ly-owned gro up of compan ies. That would be in the tran script of the last hear ing, I believe. We lis ted the three principals that ar e invo lved. MR. G.

FILMON: In doing this work in the Middle East or in consider at ion of doing this work in the Middle East, does MTX employ an ag ent in negotiating these matters an d if there is an ag ent involv ed in negotiat ing these ar ra ngements, what remunerat ion an d what ar e the terms of remunerat ion? Is there an y contract involved? Ho w ar e these ind ividua ls pa id? MR. G. HOLLAND: Mr. Cha irm a n, MTX has no agent in Saudi Ar ab ia . MR. G. FILMON: Does MTX have ag ents an ywhere or does it pay fees to anyone in order to obtai n this work or these contracts?

I ri • I Thursday, 14 July, 1983 MR. G. HOLLAND: Mr. Chai rman, I'm not awar e of an y insta nce where that has occur red. We do have prop osa ls for co-operative ar ra ngements with other telecommu nicat ions su pplie rs an d un der th ose ar ra ngements there wou ld be provisions for a return to both compan ies, MTS an d the as socia ted compa ny, but I'm not awar e of any ag ents, ap p ointed or pa id, du ring the brief history of MTX. MR. G. FILMON: Then the relat ionship with Telecom is simply that MTX is a su bcontractor to do work which it obt ai ns in the mid-Eas t. MR. G. HOLLAND: Yes, Mr . Cha irm an .

MTX develops an d maintai ns a list of su ppliers with whom we're familiar; with whom we have had experience; an d that list of su ppli ers is checked with AI Bassan Internationa l and when they have requirements, su pplies ar e obtai ned from that list. Beyond that, as I mentioned earlier, we do provide as si sta nce in pl an ning an d design an d engineering, � ins tallation, maintenance and management procedu res of the inst allation, an d some sta ff trai ning or sta ff development. MR. CHAIRMAN: Mr .

Filmon, I woul d dr aw your attention to Pages 94, 95 an d 96 of the committee tran script of the 24th of May. Ma ny of the questions you have ra ised ar e ad dr essed in the tr an script. You had mentioned earlier that you weren't awar e whether or no some of these questions were duplicates. Ma ny of them ar e ad dr essed in the tran script of the 24th of May meeting. Further questions? MR. G. FILMON: Thank you, Mr . Cha irm an. MR. D. ORCHARD: Mr . Cha irm an, I wonder if the General Manager could gi ve us an indicat ion of the current sta tus of the IDA project, the compa ny an d the technology. MR. G.

HOLLAND: Mr . Cha i rma n, as we reported to the committee last year, the project IDA, per se, has been terminated. The plan however is in place, service is continued, includ ing cable television where there is a licensee an d the intention is that the existing network would be avai lable for tria ling of new produ cts or testing customer reaction to certain services; it is avai lable for that pu rpose. MR. D. ORCHARD: The MTS had an ou tsta nding debentu re with lnterdiscom Systems Ltd. of $500,000.00. I wou ld as su me, if my memory serves me correctly, that was written off last year? MR. G. HOLLAND: Mr .

Chai rman, that has been written off in the MTS books an d agai n, as we reported last year, MTS acquir ed patents an d propr ieta ry rights to certain elements of the pro ject that had been developed specifica lly for Pr oj ect IDA. MR. D. ORCHARD: When you mention those patents an d proprie tary rights, I wou ld as su me they centre ar ou nd the Omtel 2 equipment. Does that equipment 135 an d the patents to it, propri etary rights to it, have a market value at the present time? MR. G. HOLLAND: Mr . Cha irma n, on both Pr oject IDA an d the Elie-St.

Eusta che fibre optic proj ect, we've had a great deal of interest nation a lly an d internat iona lly, both by telecommuni cations compa nies an d su ppli ers. The list of visitors is quite impr essive. We have been talking to certain manufacturers in the cable television ar ea. The degree of interest varies in these discus sions. The interest in the pa rticular technology remai ns high and we're hopeful that there will be further development in that ar ea. MR. D.

ORCHARD: Wou ld the Telephone System have su fficient confidence in the technology, that they woul d be proposing to the government an expa nsion of the cable system utilizing that technology? MR. G. HOLLAND: Mr . Cha irm an, I think we have explained to the commit tee in the past that MTS does not have a research an d development hou se or a manufacturing su bsidiary an d we could consider it ab solutely essentia l that some manufacturer develop the technology to a produ ction stage. At that point, I believe that MTS wou ld be extremely inter ested in the produ ct, economics being manageab le. MR. D.

ORCHARD: I guess that 's the point of my question because un der provisions , as I un dersta nd them, of Bill 78, the Telephone System is obt ai ning - sho uld this bill pa ss -the ab ility to own an d inst all an d maintain the type of technology that we're talking ab ou t as developed in IDA an d although the system has no di rect research ar m or manufacturing ar m, neither of tho se may well happen in the pr ivate sector or a jo int ventu re with MTS without a market for the technology an d if you pu t the cart before the horse and the system was to decide to inst all the IDA technology, I'm su re you could int erest a manufacturer in un derta king the establishment of a manufacturing firm and I wou ld as k if that is being contemplated either in the management of MTS or in conju nction an d consultation with the government.

MR. G. HOLLAND: First of all, Mr . Cha irm a n, as I un dersta nd the bill before the Ho us e, it extends the tradi tion al policy that network components sho uld be determined according to MTS standards and be owned by MTS as the common carrier , which has been the · trad ition a l policy for many decad es in this province. In response to the second question , I did qualify ou r interest by the economics that it would present.

The Ma nitob a marketplace is quite lim ited in itself. lt would be necessa ry for the manufacturer to develop a much bro ad er marketplace in order to get the utility of scale, the mass produ ction that wou ld bring the components down to a level that we could economically ju stify their acquisition. MR. D. ORCHARD: Not that I'm going to debate the bill with Mr. Ho lland , I intend to debate that this evening with Mr. Pl ohman, but the trad ition al ownership of equipment that has been going on for decades, I believe was for provision of telephone service. I don't believe

Thursday, 14 July, 1983 there was a longs tanding policy to extend that end equipm ent owner ship into the telecommu nicat ions system, but as I say we'll debate that with the Min ister this evening. Some questions on the lnterdiscom Systems etc., which ar ise from, I believe, Mr . Coyne is now an emplo yee of the Telephone System as of ab ou t a year ag o, if I recall correctly? MR. G. HOLLAND: Mr . Cha irma n, Mr . Coyne has termin ated his emplo yment with MTS an d is now working in the USA. MR. D. ORCHARD: I see. Then what was Mr . Coyne doing with MTS whilst he was emplo yed there? MR. G. HOLLAND: Mr .

Cha irma n, Mr . Coyne head ed a very sma ll gro up of engineers who worked very closely with the Assis tant General Ma nager, attempting to review the emerging technologies an d the emerging marketplaces in the telecommu nicat ions field an d to propose longer-term plan s and business strategies that conformed with the emerging world. MR. D. ORCHARD: And were th ose plan s an d str ategies developed and avai lable for the management of MTS to review an d make decisions on? MR. G. HOLLAND: Mr .

Cha irm a n, yes, there was a regu lar flow of propos als an d ideas an d some of them intended to sensitize the rest of ou r senior management to the trends in that ar ea. MR. D. ORCHARD: In the initi al sta rt-u p of Pr oject ID A, when was the original request for propo sa ls made to firms who were interested in inst alling an d ru nning the technology project? MR. G. HOLLAND: Mr. Cha irm an , I don't have that inform ation read ily avai lable un less Mr. Anderson reca lls the dates. - (Interjection ) - Mr . Ch ai rma n, Mr . Anderson ind icat es prob a bly 1977 thro ugh an d into 1978. MR. D.

ORCHARD: Now, my recollection of the method by which ISL, lnterdis com Systems Limited was chosen as the contractor, I believe there were eight propos als that were su bmitted from other firms, an d lnterdiscom Systems Limit ed was chosen even though they weren't necessarily the lowest quote to inst all the project. Is my memory correct there, Mr . Ho llan d? MR. G. HOLLAND: Mr . Cha irm an , yes, this was an R&D propos al as oppo sed to a classic an d forma l tender. The most promin ent firms were as ked to su bmit propos als for the stu dy.

Those were reviewed by ou r engineering sta ff an d ISL was considered to most closely conform with the thesis being tested by the project. MR. D. ORCHARD: Now, it's also my memory that the origin al contract was awar ded at some $875,000 an d due to change of locat ion an d other varia bles the contract ap proa ched $1 .6 million an d after that , with the ad diti ona l $500,000 debenture plus an ad dition al 136 $1 15,000 maintenance agr eement that was str uck with the firm, with ISL.

When the General Manager mentions that lnterdis co m Systems was chosen ou t of the eight firms to un derta ke this experimental project because they most closely met the thesis, did lnterdiscom Systems Limited have a backgroun d of experience that could prove they had the ab ility at that time, do you recall? MR. G. HOLLAND: Mr .

Cha irm a n, the principl es of ISL had been oper at ing un der a firm called Coyne Associates in Montre al. it was prim a rily a profession a l consulting service that they had provided. it was the view of ou r engi neers, loo ki ng at credenti a ls an d experience of the princip als, that they were highly qualified to un derta ke the proj ect. MR. D. ORCHARD: Now in pu tting ou t the request for tenders from the firms that ended up bidding on it, did MTS interna lly draft the specificat ions, etc., an d was it an interna l docum ent from the Ma nitob a Telephone System to which these firms bid? MR. G.

HOLLAND: Mr. Chai rma n, it's my recollection that this was not a tt..l der specificat ion in the us ua l fashion that is sent ou t. lt was a re;quest for propos als. The concept or thesis of the project would have been spelled ou t very clear ly in the materia l that went ou t, an d then the responses judged by how closely they conformed to the prop osed R&D project. MR. D. ORCHARD: Then could I as k who drew up , or was it an internal docum ent to which these compa nies were attempting to bid? Wa s it an internally drafted R&D research project, was it all envisioned an d dra wn up interna lly at MTS? MR. G.

HOLLAND: Mr . Cha irm a n, yes it was draw n up internally un der the dir ection of the as sist ant General Manager an d his as socia tes. MR. D. ORCHARD: There was no retention of an y ou tside consulting firms who as sisted in the drafting of the criterion of the project then? 1.. MR. G. HOLLAND: Mr. Cha irma n, I wou ld have to defer to Mr. Anderson on that. I don't recall. MR. CHAIRMAN: Mr. Anderson could you pleas e come forward an d take the mike? MR. S. ANDERSON: Mr . Cha irm a n, the an swer is no. The docum ent was drawn up interna lly. Nobody else pa rticip ated in the drawing.

We drew the inform ation frcm di scus sions with people, but they did not pa rticipate in drawing up the specificat ion. MR. D. ORCHARD: So then it's fair to say that there was no ou tside consulting firms, etc., that were partner to the drafting of the original propos al an d that that was all thoug ht up within the engineering an d senior management of the Telephone System? MR. S. ANDERSON: Mr . Cha irm a n, that is right. In dr aw ing up the specific at ion, we al ways di scus s

I I • • I Thursday, 14 July, 1983 particular technologies with other people, but there was nobody else pa rticip at ed in drawing up that spec. MR. D. ORCHARD: Does Mr. Anderson recall who some of the ou tside people that the idea wou ld have been boun ced off of for ad vice, I as su me, an d critiq ue? MR. S. ANDERSON: Well, Mr . Cha irm an, I think we've di scussed it with various al arm compa nies, because it was an int egrated technology we were interested in. I do believe we did di scu ss it with John Coyne Associa tes, if that 's what Mr.

Orchard is talking ab ou t, but the actual development of the specificat ion was done in-hous e. MR. D. ORCHARD: Now I as su me that John Coyne Associa tes, if it's the sa me John Coyne who had the firm lnterdiscom Systems Limited, which eventua lly was chosen to do the work from the eight tenders su bmitted, even though it wasn't the lowest tender. That 's one an d the sa me John Coyne? MR. S. ANDERSON: Mr . Chai rman , yes. MR. D. ORCHARD: Well, Mr . Cha irm an , that 's an interesting circums tance to develop.

Wou ld it be a fair question to as k whether an y of the other seven firms who bid an d were not su ccessfu l were consu lted, or had input to the concept of the origin al request for quotat ions? MR. S. ANDERSON: Mr. Cha irma n, yes some of them were, I don't know if all of them were. MR. D.

ORCHARD: Now the ar ra ngement, as I say, could well have been conceived or constr ued as a less than ar ms-length ar ra ngement, if Coyne Associ ates had access or knowledge of the request for quotat ions, an d then his firm, lnterdis com Systems Limit ed was chosen, not as the lowest tender, it was chosen to un derta ke the project am ongst eight other bidders.

To an ou tside observer, that might ap pear to be th at lnterdiscom Systems Limited was bidding from a privileged position when, in fact, they weren't the lowest bidder but yet were chosen, becau se their pla n most closely ap pro x im at ed the in tent an d design an d the specificat ions of the pro je ct; which it wou ld ap p ear as if he may have had some input in as sisting the Telephone System in designi ng.

Then shortly after a couple of criteri a changed, whereby the original contract was almost doub led an d then an ad dition al $615 ,000 was put by MTS into lnterdiscom Systems Limited to further the pro ject. lt went from $875,000 to ap pro xi mately $2.2 million an d I guess what made me question what was happening is with the hiring of Mr. Coyne by the Telephone System after Project lOA had officia lly wou nd down. lt looked like an interesting circle of as socia tion by Mr . Coyne with the Telephone System. But I as su me that Mr .

Ho lland an d the management can as su re the commit tee that there was no possibility th at Mr . Coyne woul d have had an inside tra ck on the request for quotations, thereby giving lnterdiscom Systems Limit ed the leg up in bidding most closely to the specificat ions. MR. G. HOLLAND: Mr . Cha irm an, I wou ld ag ai n emphas ize that this was an R&D pro ject, the su ccess 137 or failure of which depends very much on the availab ility of top-notch profession a l personnel an d that forms a very impor tant criteri a in that selection.

Our pro je ct was managed very careful ly an d all pa rties wou ld confirm that we had very good value for the investment, excellent resu lts from that investment. I might just remind the commi ttee that MTS was in a very unus ua l situation where it had major investments at that time in coax ial cable an d very few telecommunications compa nies were active so that MTS was in a bit of a un ique positi on.

The other facet of it was that there were many many changes occur ring in telecommu nicat ions generally an d we felt that the pro je ct was well justified in exposing ou r professiona l engineers an d computer specia lists to some of this technology an d also accumulating customer reaction to it. Certa inly we did have excellent co-operat ion from the residents of sou th Head in gley as we have had in Elie an d St. Eusta che. MR. D. ORCHARD: Yes, Mr .

Cha irm an , but the General Manager is sa tisfied that in selecting the tender from ISL from a bid of a gro up of eight different compa nies, the General Manager is satisfied that Mr. Coyne, through his oper at ing compa ny, lnterdiscom Systems Limited, did not have an inside track in designing exactly what the Telephone System wished because of his asso ciation in the origin al dra fting of the propos al for the Telephone System. That's the question that I wou ld like to have clarified, if Mr . Hollan d can. MR. G. HOLLAND: Mr .

Cha irm a n, ou r engineers were consta ntly consulting with other telecommu nicati ons compa nies an d su ppliers both of telecommu nicat ions equipment and cable television equipm ent. There wou ld have been many discus sions as to the avai lability of current technology. I'm quite su re that we would have di scussed it, as well, with Bell Northern Research and Northern Telecom an d other major su ppliers. Based on the pa ra meters that this was a research pr oje ct, the imp or ta nce of the experience an d qualifications of the people involved, I'm satisfied that it was handled very well an d quite correctly.

MR. D. ORCHARD: Well, I'm pleas ed to hear that , Mr .

Cha irm a n, becau se even thoug h dis cussions were un derta ken possibly with other firms, the pro ject was awar ded to one firm who did have dis cussions an d awar ded to, as I un dersta nd it, lnterdis com Systems Lim ited who did not have an active compa ny at the time. lt was an incorpor ated compa ny with no ongoing activities, no other pro jects un der way, it was my un dersta nding, so that in contras t to say Bell Northern or Northern Telecom, it would ap pear as if the company chosen at not the lowest bid, did not have a track record by which the system cou ld evaluat e their potenti a l to ad equately perform the un derta king.

We ll, having that as su ran ce from the Ge neral Ma nager, that completes my questions there. I think my colleague, Mr . Enns, has some questions on Elie. MR. CHAIRMAN: Mr. Enns. MR. H. ENNS: Mr . Cha irm an , if the su bject matter has been dealt with at an earlier session of the commit tee, you' ll be the first, of course, to draw that to my attention.

Thursday, 14 July, 1983 At Elie, Mr. Cha irm an, thro ugh you to the General Ma nagE!i'; MTS, of course, is continu ing its fibre optics work, could the Genera l Manager give us some up dating of what 's hap penin g in that fibre optics experimental progr am? MR. G. HOLLAND: Mr. Chai rman, the forma l period of the pro j ect termina ted earlier this year.

MTS is worki ng with the Depa rtment of Comm un icat io ns to ar ra nge a contract an d un derstan dings under which MTS wou ld take over owner ship of the plant for a no mina l fee an d undertake to maintain it an d continu e the facility as pa rt of ou r infras tructure. I might say that the costs of that plan compa red with an al terna tive un der which the pro je ct woul d be dismem bered an d dism a ntled ar e ro ug hly the sa me. MR. H.SNNS: And what wou ld MTS actually be taking over? th ere ar e a number of hom es, farms , being serviced in that tria l.

Wh at type of services ar e they getting, the regular commun icat io n services plus, or is this essent ia lly a tria l zeroin g in on the fibre optics technology to deliver the, what I wou ld call, regular commun icat ion services of MTS? MR. G. HOLLAND: Mr. Cha irm an, the plant that MTS wou ld acqui re wou ld includ e the centra l office an d the very specia l equip ment manufactured for the project, the fibre optic distributions system an d some terminal equipment. The tria l was the first of its kind to test fibre optics in a loca l distrib ution situa tion.

Fibre optics is no w us ed quite extens ively in interoffice hig h-traffic communicatio ns, but this was to test in a sma ll, prim a rily ru ra l centre, the econo mic feas ibility of us ing fibre su ch that priv ate-line telephone service can be offered along with bro ad cast services, Teletex or Videotex retri eval, all on the on e distrib ut ion network. MR. H. ENNS: Mr . Chai rman, I'm of course famili ar with the ar ea an d we have some of Ma nitob a' s finest an d most su ccessful ag ricu ltur al people, large farms , oper ating in that ar ea.

For instan ce, a service su ch as the Gr as sroots Telido n Service which, by an d large, is avai lable at in stit ution al offices su ch as ag rep offices in different pa rts of Man itob a . That service could be provided with the fibre optics distrib ut ion system in place in that ar ea to in div idua l farm families if they chose to ap ply for it or get the termina l connector. MR. G. HOLLAND: Mr . Cha irma n, Gr as sroots was offered on the service to selected hous eholds an d the elementar y school there, so that the service is avai lable technically. MR. H. ENNS: Mr.

Cha irm an, Saskatchewan, I believe, is in the process of some consider a ble expa nsio n in their system us ing the fibre optics technology. Does MTS as a resu lt of their experience at Elie in its planning sta ge look to su bsta ntia l expan sion of fibre opti r.<: in the Man itob a system? MR. G. HOLLAND: Sask Tel has un dertaken a major fibre optic networki ng plan in the province for intercity traffic. Aga in, the Elie-St. Eustache pro ject was to test the economics an d the technical as pects of fibre optics 138 in the loca l distribution network. In that ar ea, it's my under standing su bject to Mr.

Anderson's correction that the economics ar e changing ra pid ly. Electron ics ar e developing ra pidly an d some economic br eakthroug hs ar e being achieved, so that I believe the engineering view is that fibre optics will likely be used in the local networks soon er than we had anticip ated an d the su ppliers ar e making a major effort in that ar ea. MR. H. ENNS: Agai n, thr ou gh you, Mr. Speaker, my un dersta nding is we have capacity in Manit oba, in Winni peg, to produce the fibre optic cable, if that 's what you call it. Is that the case? Is it Ca nadawide or MR. G. HOLLAND: Mr .

Ch ai rm an, there ar e two Ma nitob a-bas ed cable su ppliers with the capa bility to provide fibre optics. MR. H. ENNS: And they ar e agai n, just for my - Norther n Telecom an d Ca nada Wire? MR. G. HOLLAND: Northern Telecom has a very large oper at ion at Saskatoon . Ph illips Ca ble has a plan t at Po rta ge la Pr ai rie, an d Ca nada Wire an d Ca ble ar e loca ted in Fort Ga rry. MR. H. ENNS: The fibre optic cable us ed to date has been from Wh ich su pplier , Mr. Cha irm a n? MR. G. HOLLAND: Mr.

Chai rman, it is pu blicly tendered, an d the principle su ppliers of ou r pro jects to date have been Norther n Telecom an d Ca nada Wire an d Ca ble. MR. CHAIRMAN: Further questions? Mr . Orchard. MR. D. ORCHARD: Than k you, Mr. Cha i rman . MTS has on stan dby helicopters in Northern Manitob a an d that 's been a tend ered bu si ness. Who was the su ccessful firm who was awar ded the helicopter tender this year? MR. G. HOLLAND: Mr. Ch ai rm an, the helicopter services were awar ded on Ap ril 12, 1983 to Cu stom Helicopter . MR. D. ORCHARD: What was the contr act price? MR. G. HOLLAND: Mr.

Cha irm an, the contracts ar e tendered in the form of an hour ly rate with a minim um nu mber of hou rs an d cert ain sta ff maintenance an d lodgi ng costs. MR. D. ORCHARD: Wh at was the contra ct price per hou r for the minim um guara nteed hou rs? MR. G. HOLLAND: Mr. Cha i rman, I don't think I have that inform atio n availab le. May we undertake to provide that to Mr . Orcha rd? MR. CHAIRMAN: Mr. Orchard, the Cha irm an has un derta ken to provide that inform atio n. Do you have further questio ns ?

Thursday, 14 July, 1983 MR. D. ORCHARD: Yes I do, Mr . Cha irm an. Wa s Custom the lowest bidder? MR. G. HOLLAND: No, Mr . Chai rman. MR. D. ORCHARD: Did Custom offer an hourly bid with contingency costs of staff maintenance an d lodging in ad dition to their hourly bid? MR. G. HOLLAND: Mr . Cha irm an, I would have to as k Mr . Beatty if he recalls the terms of the tender sufficiently well to an swer that today, or whether we would have to obt ai n the inform at ion. Mr. Beatty indi cates that he does not have the specifics here. MR. D. ORCHARD: Could the General Manager provide for me then the bids?

I believe there were three helicopter firms bid. Could the General Manager provide me the names of the thr ee firms, the hourly rate bid by each firm, an d whether each firm bid with or without contingencies included in their hourly bid price? In the case where one firm may have bid with contingencies included and an other firm bid with contingencies as an ad di tional charge to be billed to MTS, could the General Manager provide the cost of that billing, an d what the cost would be over the 22-month contract?

Also, could the Genera l Manager ind icate whether the equipm ent being offered by each firm was compa rable equipment, or did one firm have superior equipment to the other compa nies who have offered a tender? MR. G. HOLLAND: Mr. Chai rma n, could I ask Mr. Beatty to confirm that we have inform at ion in order to an swer all of tho se questions? Mr. Cha irm an , we do, an d we will undertake to provide them to Mr . Orchard. MR. D. ORCHARD: Mr. Chai rman, the General Manager ind icated that Custom was not the lowest. Could he indicate why they were given the contract without detai l of dollars?

Could the General Manager ind icate why the lowest tender would not have been accepted in this case? MR. G. HOLLAND: Mr . Chai rman , there were many complexities involved in the tender process this year. We had had a certain number of difficulties with the second low bidder which extended over some months under a previous contract. The lowest bidder was from out of province. Under boa rd policy at the time the tenders were received, we were as ked to look very, very carefully at rather minor differences in tender prices in order to carefully consider the imp act of our decision on Ma nitob a. MR. D.

ORCHARD: Now the General Manager mentions boa rd polic y. Could the General Manager expand on that for me, pleas e? MR. G. HOLLAND: Mr. Chai rman, at that time the policy was that where all other consider at ions were equal an d where there was a price differentia l of less than 5 percent, that those pa rticul a r si tuations would be forwar ded to our boa rd for individu al consider at ion. MR. D. ORCHARD: Now is that a new policy that the boar d an d MTS have? MR. G. HOLLAND: Mr . Cha irm an , it's a policy that came in early in 1983. MR. D. ORCHARD: That brings us to an interesting new turn of events then, Mr.

Chai rma n. Ca n I ask further that sinc e Custom wa s awar ded the contr act, theoretically because the lowest bidder was out of province, is Custom a Ma nitoba firm? MR. G. HOLLAND: Mr. Cha irm an , Custom Helicopters has a Ma ni tob a base an d were the providers of service to MTS on a highly satisfactory basis for at least two years an d that would be for two years prior to the contracts let in 1982. MR. D. ORCHARD: Now, the major sha reholders of Custom Helicopter then ar e Ma nitob a residents? MR. G. HOLLAND: Mr.

Chai rman, I don't have that inform at ion at hand, but we could attempt to obta in the inform at ion. MR. D. ORCHARD: That would be ap pr eciated. Now the General Manager ind icates that there is a 5 percent buying preferentia l that was triggered in this particular insta nce. Does that 5 percent buying preferentia l carry through to all purchases, construction, etc., etc., that ar e tendered by the Ma ni toba Telephone System? MR. G. HOLLAND: Mr .

Chai rm an, I should have emphas ized the fact that the 5 percent is a guideline. it's a guideline to our ad min istr at ion in order to sort out those projects that ar e to be referred to the boa rd for individu al judgments and almo st the entire emphas is is on manufacturing suppliers. 139 MR. D. ORCHARD: Does the policy now ap ply to all manufacturers, suppliers, purchases, as tendered by the Telephone System? MR. G. HOLLAND: Mr . Cha irm an , the policy would ap ply that all such contracts would be referred to our boa rd for review and a decision. MR. D. ORCHARD: Now, at the last meeting we had, Mr .

Holland, you ind icated that MTX identifies suppliers an d suggests sta ndards for equipment installation an d has been obtai ning tho se prim ar ily, I believe -from is the word you wish to use -Ma nitoba an d Ca nad ia n manufacturers for some time. Now in the case where MTX may well be supplying materia ls to Saudi Ara bian projects, ar e those materia ls purchased by tender? MR. G. HOLLAND: Mr.

Cha irm a n, this is a negotiated supplier list. it is norma lly negotiated based on very good data acquir ed by MTS, in its volume pur chases an d the prices ar e then negotia ted an d ar ra nged by contract with the suppliers. MR. D. ORCHARD: Then I take it in MTX pur chases there is no open tendering process to obta in those suppli es that ar e needed? MR. G. HOLLAND: Mr . Cha irm an, no. In pr actical terms, when our customer places an order due to the di stances

Thursday, 14 July, 1983 involved, we have to be ab le to ar range with the supplier for very ra pid tran smitt al of that equipment. MR. D. ORCHARD: Now, without tendering for whatever reas on, is there a major supplier that MTX has been using? Does one firm come out successful an d supply a goodly percenta ge of the MTX pur chases? MR. G. HOLLAND: Mr . Cha irma n, there is an ar ray of suppliers and I'll try an d locat e that. One exam ple is the ITT plan t based in Winnip eg which has supplied severa l thous an d telephone sets. MR. D. ORCHARD: ITT is whom? MR. G. HOLLAND: ITT? MR. D. ORCHARD: Right. MR. G.

HOLLAND: lt is part of the large internat iona l conglom erate -ITT. MR. D. OHCHARD: Are there an y other compa nies that supply major am ounts of equipment to these MTX quo tes, or ar e these MTX requests for equipm ent? MR. G. HOLLAND: Mr. Cha irm an, typical Ma nitoba suppl iers would be IB M, ITT, Northern Telecom, Priority Electronics, Digit al Equipm ent an d really an ar ray of ot her id eogr ap hi cs. Tektronix for test equipm ent, Associa ted Test Equipment is an other Ma nitob a firm. Fleming Pedlar, Wes Electronics, Doyle Ma chinery - there really is quite an ar ray. MR. D.

ORCHARD: In that ar ray of compa nies, does one compa ny sta nd out as achieving a hig her dollar volume than other compa nies? MR. G. HOLLAND: Mr . Chai rman, that depends tota lly, of course, on the requisitions of our customer in Saudi Arab ia . From memo ry, the largest orders would be ITT, Develcon, a Ca nadi an firm, Time plex, Tele-La bs (p honetic) , which ar e all Ca nadian supplie rs. MR. D. ORCHARD: In construction pr oj ects undertaken within the pro ject, I as sume that they ar e all tendered when you need equipment? MR. G. HOLLAND: Mr. Cha irm an, ar e still discussing MTX or MTS? MR. D.

ORCHARD: No, this is for const ruction undertaken by MTS within the province. MR. G. HOLLAND: Mr. Chai rma n, MTS has trad it ion a lly had a public open tender process. Sp ecificat ions ar e published an d made avai lable to all known in terested suppl iers and they ar e publi cly opened. MR. D. ORCHARD: Does the 5 percent preferentia l to Ma nitoba manufacturers now ap ply to those pur chases for use by MTS in expa nding the plan t within the province? MR. G. HOLLAND: Mr .

Chai rman, on those components of projects involving manufactu re, tenders would be 140 referred to the boa rd where the price differentia l is less than 5 percent and where all other things ar e equal; that is, the MTS requir ements ar e being met. MR. D. ORCHARD: Are there an y major supplie rs in dollar volume that emerge in the Manitob a purchases? r.tR. G. HOLLAND: Mr . Chai rman, I think that Mr . Orcha rd ma de the point that there ar e di fferent

definitions of a Ma nitob a suppl ier. Northern Telecom is a very large supplier to MTS. They have a plant in Winnipeg, which manufactures tran smission equipment, with 500 or more employees; that certai nly would be the case. Simil ar ly AEL Mi crotel has a plant where they manufactur e certa in components; others in other provinc es. MR. D.

ORCHARD: Now, when Northern Telecom's name comes up the odd time in various purchases, it brings to question the recent, I guess it was in Februa ry, or Ja nua ry, at the invit ation of Northern Telecom I think the Assi sta nt General Manager pa rtook in a Ca ribb ean Cruise dubbed, I guess, by Northern Telecom the "Loveboat Cruise." Wa s that pa rticula r cruise pa id for entirely by Northern TP.Iecom or was MTS paying for the costs of that ? MR. G. HOLLAND: Mr . Cha irm an , this was a major internat i ona l semina r.

The cruise portion was entirely hosted by Northern Telecom with guests from North America an d Europe. All :>ther expenses were borne by MTS. MR. D. ORCHARD: I see, so that I don't get the wrong underst an din g from the newsp a per reporti ng, that Northern Telecom so-called Lovebo at Cruise was an ad di tion al feature of a conference that was going on which you were attending in Florid a . Is that a fair as sumption? MR. G. HOLLAND: Mr . Cha irm an, the semina r was held ab oa rd ship. The au ditorium of the ship and their meeting rooms were used for multimedia presentations, discussions.

Northern Telecom had their very senior management resea rch officers an d manufacturing authoritie s present to make presentations and to answer all questions. MR. D. ORCHARD: I gu ess maybe I might be mis und ers ta ndin g then. This entir e sem in a r was spons ored by Nor thern Telecom. lt wasn't a communicat ions meeting involving other compa nies, and it was entirely Northern Telecom's presentat ion of their various capa bili ties in the telecommunicat ions indu stry. Mfl. G.

HOLLAND: lt was entirely a Northern Telecom semin ar an d it was held to dis cuss, with both telecommunications compa nies an d large priv ate firms, the Northern view of the next five to seven years in technological direction. Their corpor at e commitment to very subs tantial research an d demonstr at ions of the equipment termina ls, all of which were related to this five-or seven-year technological plan. MR. D. ORCHARD: Then the entire semina r was on the cruise ship, an d did I correctly hear you say, Mr.

Thursday, 14 July, 1983 Hollan d, that that portion of the semina r was paid for by Northern Telecom? The costs, I as sume, of ai rfare, of getting there, getting to Florid a , to Fort Lauderda le were pa id for by MTS . Is that correct? MR. G. HOLLAND: Yes, Mr . Chai rman . MR. D. ORCHARD: Well, I want to make a comment. We 've got an interesting situ at ion here which obviously the government must have ap proved. We' ve got a 5 percent Ma nitob a bu ying preferenti a l which is impl emented in late 1982.

We' ve got a major Ma nitob a supplier in Northern Telecom who may or may not be ab le to enjoy busi ness with the Telephone System because of a 5 percent purchas ing preferentia l now, given au thority by the boa rd an d I would as sume by the government an d, Mr . Hollan d, we've got what sounds to be a fairly enjoy able semina r. Mr .

Holla nd, would you not be concerned that public opinion might interpr et a 5 percent buying preferentia l which may be exercised in favour of Northern Telecom, an d then the accepta nce of this semina r as being open to public scrutiny that, in fact, the taxpayers, the ra tepa yers in the Telephone System may say -whoa , what's going on here?

We' ve got policy to awar d 5 percent more of taxpayer dollars to purchase goods from a Ma nitob a firm, which may be Northern Telecom, and within a couple of months, senior management of the system ar e part of a semina r in the Ca ribb ean on a cruise ship -compliments of that very sa me firm. Is there no possibility for a misinterpr etation by the ra tepayers that, pa rticula rly when they'v e had two rate increas es in the last year an d a half, to question whether that's a wise policy decision to make? MR. CHAIRMAN: Mr. Holla nd. Order please. MR. G. HOLLAND: Mr .

Cha irm a n, I would think that is a perfectly reasona ble question for the public an d our customers to as k. I think there is a real resp onsibility on my pa rt to expla in why that happens.

Again, MTS does not have its own ma nufacturing vert ica lly­ integrated structure. lt does not have its own R&D house, an d we're very relia nt on our interface with all of our suppl iers to keep ab reast of their plans an d what technology is going to be forthcoming in the next while an d their busi ness str a tegy, so that I would estimate that prob a bly in 1983 we have met certainly with all suppliers who request presentat ions or meetings, an d I likely have met with at least 10 or 12 such suppl iers. I think that there is a real responsibility cert ainly for Mr.

Anderson an d quite often for me to give a priority to that function. HON. J. PLOHMAN: Well, Mr . Chai rma n, I think that the General Manager sa id that it's a perfectly legitimate question for the people of Ma nitoba to as k. I think it's a perfectly legitimate question with regard to activities of MTS an d Mr. Holla nd in at tending a conference that was sponsored by an individu al manufacturer at MTS expense, but cert ainly the tying to the 5 percent is, to me, totally outla ndish and ridiculous.

I ju st can't see the kind of reas oning th at the honour a ble member is ap plying there, an d maybe he feels he can make a better case than he has up to this point. 141 The honour a ble member is perfectly awar e that a marginal price preferential policy has been imp lemented by this government under the Buy Ma nitoba Progr am that we've dis cussed at some length in the Throne Sp eech, in the speeches in the House, with the Min ister of Economic Development and Tourism an d the Minis ter an d myself in Go vernment Services in volved with purchasing with the government, an d also involved with a Mi ni ster responsible for one of the Crown corpor at ions.

The pol icy that the in dividu al member that the Member for Pembina was as king ab out, if the 5 percent was an interim pol icy, as a guideline until a policy was developed with my long-las ting policy that we wanted to put into place, we have im plemented that policy in government pu rchasing an d it generally deals with a margin al price difference. Each case is dea lt with on an ind ividu a l basis according to the economic imp act it would have for the province. There is an an alysis done of the tax benefits an d so on an d the employment factors for the provinci a l scene an d then a decision is made.

I think the honour a ble member would have to ad dr ess that whole concern when given the economic conditions that we have presently, given the fact that a number of provinces indeed have very much higher an d strict local purchas ing policies, an d I'd be willing to provide that inform at ion to the honour a ble member if he was interested in it. B. C., Qu ebec, a number of the Maritime Provinces, certainly have very strict preferential policy progr am s.

We feel that by doing it on an ind ividu a l basis on a margin al percentag e an d considering an economic imp act of purchas ing out-of-province as op posed to in-province, that it is a very prudent an d wise way to do it without in viting reta liat ory action by tho se provinces that don't . However, as I sa id, a number of provinces have - an d I think the honour a ble member would be awar e of that - a preferential policy that is much stricter an d a much hi gher percenta ge. lt is very difficult for Ma nitob a firms to get a contract in Qu ebec, as the honour ab le member would know, in other ar eas as well.

So I think from the economic standpoint, the member should consider the an gle that he's pursuing an d consider whether he wants to take the position that we should not be considering Ma nitoba firms in any specia l light during these economic times that we face at this pa rticula r time, when an emplo yment situa tion is there.

I know the honour ab le member is quick to point out that there has been 52,000 unemployed - I believe it's down to 44,000-46,000 unemployed at this time in Ma ni toba -an d he cert ainly, I don't think, would be suggesting that we shouldn't be making every effort to maintai n an d preserve jo bs in Ma nitoba an d to encourag e the creat ion of new jo bs. MR. D. ORCHARD: The General Manager mentioned that he met with 10 to 12 suppliers. How many of those suppl iers did he meet with out-of-province as was the case with Northern Telecom? MR. G. HOLLAND: Mr .

Chai rman, I believe that was the only out-of-province one, other tha n perha ps through the TransCa nada Telephone System, where the boa rd occas iona lly is looking at potenti a l suppliers.

Thursday, 14 July, 1983 MR. D. ORCHARD: I can understand why you would want to meet Northern Telecom out-of-province on that particular instance, Mr . Chairman. To the Mini ste r's comments about a temporary preferential treatment, am I to assume from what the Minis ter says that the board di rective of a 5 percent buying preferential is no longer a purchasing policy guideline for the Manitoba Telephone System? And if that's the case, what has the policy guideline become now that the government has had time to review the purchasing policy? HON. J.

PLOHMAN: The MTS may be still using the marginal price of 5 percent - I believe they are still using the 5 percent. However, the purchasing policy that we have impl emented is one of a marginal price di fference; it can vary according to the situation and the size of contract, the im pact it could have on the emp loyment and economic conditions in the province, so it could be higher than that. There is no strict definition as to the percentage that is used. MR. D. ORCHARD: Well, Mr . Chairman, this is not the place to ar gue purchasing policy guideline with the Minis ter, we'll take that time up later.

But having a loosey-goosey, open-ended one is even worse than having a fixed one because then you can take 10 percent, 15 percent, and justify it by any way you wish and that is the whole problem with a purchasing policy guideline which allows you to choose other than the lowest tender when all other criteria but price are met by the bidders. it's in teresting to note that this government now is prepared to enshrine that in a policy; and it might be interesting for the General Ma nager to ind icate to us if he could, that whether the Northern Telecom plant which employs some 500 people, supply only Manitoba out of that plant; or whether, indeed, they supply other telephone companies in other provinces because if they do, you are inviting the kind of balkan izat ion of Manitoba's ind ustry by a buying preferential.

Certainly it's very persuasive to bring in this buying preferential and set up some fixed guideli nes for it, but any time we dis cussed the issue with representatives of the manufacturing community in the Province of Manitoba, they were very concerned about any effort of formalizing a preferential treatment in Manitoba, simpl y from the fact that is may dis advantage them in bidding in other provinces. Now this government, I would ask the Min ister, did this buying policy come into effect with full consultation with representatives of the manufacturing community in Manitoba? HON. J. PLOHMAN: Mr .

Chairman, that is exacdy the case. There was a great deal of consultation and discussions. The Economic Summit was one area this was dis cussed in Portage la Prairie last fall and then follow-ups were made as a result of that discussion. lt was precisely because of that consultation that the Manitoba government moved away from a fixed price preferential policy that the honourable member is advocating.

What we felt as a result of that discussion, is that quite often companies can beco me dependent on a 142 preferential policy within Manitoba, and we don't want price dependency becoming a factor where companies are no longer able to stay in business, because they may not have that kind of preference forever.

So we felt that it was necessary to deal with this in a marginal, not a fixed way -but using the word "margin al" -deal with the situations as they develop, consider the impl ications of going out-of-province as oppo sed to in-province and not applying it in every case where it did not warrant, so that there would not become this price dependency and there would not become the strict retaliation that the member speaks about where if you go with a strict 10 percent or 15 percent as some provinces have done. As I said clearly, a number of provinces have already taken that action.

Some of them don't publi cize it; some do. But they, in fact, are operating under that system.

I can reflect, the members should, I believe, decide where they are going on this kind of app roach from their position, because I recall quite clearly with regard to the Superior Bus situation in Morris earlier on this year tha t the previous Minis ter of Economic Development, the Member for Sturgeon Creek, and the Member for Morris as the ML A for the area, were indeed, with the line of questioning that they were pursuing, suggesting that the Manitoba Go vernment should be employing a preferential price policy in that particular situation. I think that came through very clearly.

That was advocated that, why is the Manitoba Go vernment letting a firm go down? Why aren't they purchasing locally? There was somet hing like 20 percent there, difference. So I think they are contradicting themselves, Mr . Chairman, in many cases. I think that what we have developed here is a flexible policy that can apply and have the good points of a prefer ential pol icy, at the same time not having the negative consequences. I think that is what is good about the policy that we have developed here. MR. D. ORCHARD: Mr.

Chairman, seeing as how this is such a good polic y, could the Minis ter ind icate when it was announced, and could he provide me a copy of the policy guideli nes by which his department and, theoretically, government pur chases are now being guided by this new policy guideline? HON. J. PLOHMAN: Yes, I covered it extensively in my speech, the Budget Addr ess, as well as the Minis ter of Economic Development. MR. D. ORCHARD: I didn't listen. HON. J. PLOHMAN: Obvious ly, the member did not listen and did not read Hansard.

I can provide the member and be quite willing to provide the member with a comp lete outline of the polic y. I will provide that to him at the earliest possible convenience. MR. D. ORCHARD: Mr . Chairman, I would like to ask Mr. Holland a couple more questions on some of the competitive retailing the Telephone System has recently gotten into. I noticed on one of my telephone bills a while back that Co mmodore VIC 20 computers were now being offered by the Telephone System . Could the

.. Thursday, 14 July, 1983 General Manager ind icate whether Telephone System, presuma bly having the potentia l of being a volume buyer from Com modore compan y, do they enjoy a lower purchase price than , say, other Winni peg retailers or wholesale buyers, sha ll I put it that way, of VIC 20 Commo dores? MR. G. HOLLAND: Mr . Cha irm an, no. We receive their sta ndard prices, pa ckag ing, etc. MR. D. ORCHARD: That brings me to an interesting circumsta nce that was brought to my attention. I would like to dis cuss it with the Ge nera l Ma nager.

The Telephone System, I believe, recently bid on a school tender for VIC 20 computers an d were successful. Am I correct on that? MR. G. HOLLAND: Mr . Chai rman , I don't have the details of it, but if we felt that we could develop a commenda ble propos al, we likely would quote on that . MR. D. ORCHARD: Is no one in the sta ff that 's here toda y awar e of whether, in fact, the Telephone System was the successful bidder on an offer to the school boar d of a number of VIC 20 computers? MR. G. HOLLAND: Mr. Chai rman , no. We have sold several hundr ed termina ls.

To whom, I wouldn't have an y data, but certa inly we can check, Mr. Cha irm an , an d provide that inform at ion. MR. D.

ORCHARD: I wonder if while the General Manager is checking that out, if he might be ab le to check for me -now he indi cates that they don't enjoy a preferenti al buying price from the Commod ore compa ny. lt was ind icat ed to me by an other ind ividu a l who bid on that contract to the school boar d, an d I may be incorr ect in that MTS was not chosen as the successful tenderer, but it was ind icated to me that the Telephone System had bid in tota l some $33,000, and that was ap proximately $5,000 below a competitor in the priv ate sector.

In fact, the $33,000 tender was ind icated to me to be below the list price of the VIC 20 that MTS would be purchas ing at but, under a specia l sa les offer, the Com mod ore comp a ny was offering some ga me cartridges with the VIC 20s which, of course, the school system did not want. So in order to bid below cost, it was ind icated to me that the Telephone System had deducted the cost of the cartridges an d bid below cost, an d is intending to sell the cartridges sepa rately to recoup their costs.

Now, no doubt, the General Manager will confirm that, but I would like to as k the Minis ter responsible if he is aw are of an y such activity. If the circumsta nces I have described ar e correct, does the Min ister agr ee that is a proper role for the Telephone System? HON. J. PLOHMAN: Mr . Cha irm a n, I am not awar e of those specific circumsta nces that the member has outlined at this point, but I can say that certainly the Telephone System has to be sure that it is ab le to compete with modern technology.

In a situa tion where trad ition al revenues in the future will be threatened an d our competition that is resulting from federal decisions, 143 from decisions that ar e being made in the United States, the MTS certainly has to look at all avenues, all possible revenue potenti a l so that it can continue to maintai n basic telephone service at an afforda ble rate, basic telephone service being, I would say, an essentia l service at an afforda ble rate for all Ma nitob an s.

So from that perspective, I believe that it is an endeavour that is one that the MTS should at least be exploring an d developing for the future in order to maintai n revenues that could be used. I know the honour a ble member will prob a bly dis agr ee that there should be cross-subsidiz at ion from some of the new telecommunicat ions services an d from this kind of activity to maintai n basic telephone services at a low ra te, a reasona ble ra te, I should say.

As a matter of fact, I believe that the Member for Pembina in a speech just last week in the House suggested, in a negative way, that perha ps some of the potenti a l revenue from telecommuni cations services that may develop in the future should not be used to subsid ize the basic telephone rates in Ma nitob a. If he indeed has that position I'd like him to expand on it but certa inly that is not my position. MR. D. ORCHARD: Mr .

Cha irm a n, we have to, from time to time remind the Minis ter of his role because he seems not to know it. it's he that is determining the policy of the government in guiding policy of MTS, not me, an d I'm as king him, does he agr ee with the Telephone System retai ling products, in competition with the priv at e sector, and as the ind icat ion is here, using some of those products as a loss lead er? Does the Min ister believe that that is a role for the Manitob a Telephone System - a legitimate role? HON. J. PLOHMAN: Mr.

Chai rman, part of that question is definitely hypothetical an d has not been established. I don't know what he's referring to when he talks ab out loss lea der, but I will tell him I believe that the retai ling of computers is a legitimate activity for the Telephone System to be involved in. MR. D. ORCHARD: Is there any limit in the Min ister's estimat ation of what sort of a retai ling service that the Ma ni toba Telephone System should get into?

Is there an y things that he would not like to see them retai ling, or is he leav ing the System wide open to compete with an y an d all private sector busi nesses in retai ling? HON. J. PLOHMAN: Mr . Cha irm a n, we're dealing with telecommunicat ion services with the Telephone System an d certa inly this is within that realm. Each situa tion would have to be considered on an ind ividu al basis. MR. D. ORCHARD: Well, you know the Min ister says one thing one time an d then he backs off an d says an other thing an other time.

Is there no limit to the retai ling activities in competition with the priv ate sector that the Minis ter sees as a reas ona ble limit for the System, or is he willing to allow them to compete openly with an y an d all priv a te sector retailers? HON. J. PLOHMAN: I don't know what the honour a ble member is referring to when he talks ab out reas ona ble limit, in dolla rs, in profit, in am ount of money that can

Thursday, 14 July, 1983 accrued to the Telephone System to use potentially in the future to cross-subsid ize basic telephone rates? Is he suggesting that I should put a limit on that amount? We don't want to get too much from other sources? MR. D. ORCHARD: I am asking the Min ister who is having difficulty comprehending. Is he willing to condone any competitive retail operation of MTS which will compete dir ectly with pri vate sector firms who employ people in the pri vate sector in Manitoba? HON. J. PLOHMAN: Did the honourable member say any? MR. D. ORCHARD: You heard correctly. HON. J. PLOHMAN: Mr .

Chairman, I said that we're dealing with the telecommuni cations area and the situation that has developed with regard to computers is certainly in that area. it's very closely related to the busi ness the Telephone System is in and the busi ness that is emerging for MTS as the telecommunications common carrier in Manitoba.

I wouldn't go so far as to say, at this point, that the government or I would see that any retailing activity would be promoted and I think that's a very wide open type of term to use by the member and anyone would be foolish to suggest that they would just make a blanket statement to that effect. MR. D. ORCHARD: Mr. Chairman, does the Min ister consider that MTS is in any better position to compete with the pri vate sector because of credit avai labilit y, because of advert ising which they can undertake in their monthly mailing of bills?

Does the Minis ter consider them to be a normal competitor in the marketplace or would he consider that the Telephone System in certain methods and ways at their dis posal can have advantages in terms of retailing to the consuming public of Manitoba? HON. J.

PLOHMAN: We ll, the Telephone System may be able to use the means at their disposal to advertise or to get a message through to the public, however, they have also disadvantages in that they are not able to use funds from basic telephone service to subsidize an operation such as retailing or getting into the sale of computers, the development of markets, of other products. They certainly cannot use funds from the revenues obtained from the telephone customers of Manitoba.

So they are not able therefore to cross-subsid ize in a reverse way to develop these new activities and certainly a number of private firms certainly would be able to do just that. So they would have an advantage, that they could use profits from other parts of their busin ess in a wide-based busi ness to get into another activity in competition with MTS. So certainly to me, it seems, there are disadvantages and advantages on both sides. MR. D. ORCHARD: Mr. Chairman, the Min ister made some interesting comments.

I assume then that he would have no objection to CNCP wanting to terminally interconnect with the Telepho ne· System, if what's good 144 for the goose on one hand must be good for the goose on the other. If the Telephone System can compete with private sectors in retailing then the Minis ter must surely agree that the private sector can compete with MTS on telecommunications services. Wo uld that be a fair conclusion of what he's saying? HON. J. PLOHMAN: We ll, Mr . Chairm an , is the honourable member suggesting that would be in the best interests of the telephone customers in Manitoba? MR. D. ORCHARD: Mr .

Chairman, the Min ister just two minutes ago in an answer to me said that the private sector sometimes has advantages over the Telephone System and we're not going to disallow that. lt follows through naturally that if he's wanting the Telephone System to compete in the retail market he must have no objection to the priv ate communication system competing with MTS. Either that, or he's saying one thing for the Crown corp. and another thing for the private sector and he hasn't got his knowledge and his facts quite clear. HON. J, PLOHMAN: Mr .

Chairman, I'm certainly speaking from the perspective of what is in the interests of the basic telephone user of Manitoba and what the honourable member has suggested, an interconnection by CNCP with telephone services so that they can have access to the high revenue services, to the high population areas without having to provide the basic telephone service to rural and Northern areas, a rural area such as the member represents, Pembina, what he is suggesting with the CNCP interconnection would certainly result in higher basic telephone rates in rural Manitoba and this government would certainly want to do everything in their power to avoid that in the future.

So I can't condone it from that point of view. I'm speaking from what is in the public interest. MR. D. ORCHARD: So then can I conclude, from what the Min ister is saying now, that MTS can get into any sort of retai ling busi ness as long as there is profits from it which can cross-subsidize black telephones. Any level of competition with the private sector is acceptable to the Minis ter as long as it provides profit revenue to subsidize black telephone use. Is that what the Mini ster is saying? HON. J.

PLOHMAN: I very clearly did not say any, as related to the telecommuni cations field, we were discussing that earlier. I don't see the Telephone System getting into the sale of food stuffs and cars and fence posts and so on. I don't know if that's what the honourable member is suggesting but certainly I did not say that, and 1 don't agree with that. MR. CHAIRMAN: Mr. Mil ler. MR. S. MILLER: Mr .

Chairman, when the board looked at this matter and we decided to try all the possibilities, the feasibility of marketing home computers, it was with the recognition that that's what's happening, that it's the growing field, and our in terest was because of the communication capabilities which home computers make available to the public. The board would not

I Thursday, 14 July, 1983 entertain, for example, the suggestion that suddenly we get into VCRs, or BetaMax, or to selling or leasing or renting out home movies and so on, because that's not part of the communication system as far as we're concerned. The computers on the other hand, the impli cations that we see elsewhere on the continent and in Europe, is that home computers will grow in im portance and become a major commun ication device. To the extent that it's a communication device, the MTS is in terested in that field.

Now I can tell you that the suggestion that somehow we use it as a loss leader is not so because MTS does not put up sales of any kind. it adheres to the company's suggested retail prices.

There is reference to a bid by one school division, or maybe more, the question of supplying school divisions with comput ers because there is an obvious interest known in Ontario -there is a major portion who get computers into schools and I don't doubt that the same will occur here -that if we can make possible and help school divisions acquire their equipment then I think we should do so; at the same time recognizing -and I do this from the point of perspective of the board -tha t if a school di vision has comput er capabilities within their schools, then the likelihood is that students may acquire their home computers in order to tie into the school's main computer and do their work in the evening.

Certainly this is an area that is growing, the University of Manitoba, the University of Winnipeg. There are a number of access bases which are now available to the general public and this will grow in time, and to the extent that it adds to the communication revenues, MTS would be happy. So our interest is really, in going into it on a trial basis to see how it goes, would be to try to expand the usage of the overall system, because it would expand the usage of the overall system.

But I can tell you the board would not consi der, and as a matter of fact looked at a proposal which inv olved games and we turned it back because it was not within our parameters or our view of the dir ection we should go. So we're limi ting ourselves to commun ication devices of which computer is one. MR. D. ORCHARD: I thank Mr . Miller for that answer. That appears to be a more reasonable position than what the Minis ter would be willing to take. I would make the suggestion to Mr .

Mill er that there may well come a time that the Telephone System has to make the policy decision as to whether they are going to be simply the provider of the lines to interconnect and provide a flat rate line charge, as we do in Telidon, for the interconnection of home computers to main frame terminals. There are game programs as I understand, in which a pri vate retailer would sell a series of game cartridges hooked into a main frame computer and the remotes at each home would be hooked in by telephone lines.

To me there seems to be an incredible opportunity for the Telephone System to provide the hig hway on which that service can be carried, but I have to tell you I seriously question whether the Telephone System should be concerning themselves with the ownersh ip and the retai ling, etc., of the computer terminals, etc., etc. 145 I think there is a subtle distinction where the private sector must and should continue to be one of the few retailers, or the only retailer in that.

Because if one wanted to get extremely literal with the interpr etation of clauses in Bill 78, with the ownersh ip by the commission, it may be that you could interpret, if the government so im posed it on you -and this government might -that terminal computers are part of equipment which falls within the definition of apparatus, equipm ent contrivances, devices, wires, cables and fibre optics used for transmitting, control ling, securing, encoding, decod ing, emitting, mod ifying or rece1vmg telecommun ications in the system; where it's the requirement by this act that passed that the ownership of that should be with the Telephone System.

There can become a very gray area, and if there is a competing attitude within the Telephone System and not a clearly defined role of the system to take in this emerging market, you may well find that the services are not offered to Manitobans because the private sector is not willing to do it and MTS may not be capable of doing it. So there's a fine line that has to be, I believe, treaded there, and I'm pleased to see that the chairman of the board sees very real limits to the penetration of MTS into the retail market, which seems to contrast somewhat with the Min ister's position on that. MR. S. MILLER: Mr.

Chairman, the fact is that what I said is not in any way different than what the Minis ter said. When it was decided to go in to attempt the sale of home computers, the Minis ter was informed as to rationale, the reason for it, and the fact that we were limiting ou rselves to that. There was at no time any suggestion that we go beyond it, as I say, into VCRs or BetaMaxes or anything of the kind. The telephone system throughout North America is at a crossroads, and a very difficult one.

There has been, I would call it, a revolution in the United States literally, and the chickens have not yet come home to roost, and they're going to come home to roost in spades. Right now, tod ay, there's an application in in Texas by Southern Bell requesting an increase in their basic rates from $1 0.30 to $30.50; a 300 percent increase in one shot. I don't doubt they won't get it, but the mere fact that they're even thinking in those terms, it was inevitable.

As you fragmented the revenue sources for the telephone company it became inevitable, that if you're going to simply be a passive carri er, and responding to the demands to upgrade the system to be a passive carri er, then the cost of being a passive carrier has to be passed on to the basic telephone user. That's what happened.

As the telephone companie s, the divestiture in the States that led to the formation of separate local telephone companies with the lucrative busin ess, the long haul being now with the IT&T. it is that shortfall in revenue that the local Bells have to cope with, or local telephone companies have to cope with, and the only way they can cope with it is to increase their basic revenue rates, something which whether Manitoba can shelter itself from the im pact of all of these changes in the United States and partially in Canada remains to be seen.

Certainly I can tell you I didn't accept the Chairmanship of the Board of Manitoba Telephone

Thursday, 14 July, 1983 System to preside over its demise. If MTS does not change and alter and roll with the changes in the electronics world, then we'll end up as a dinosaur and a very expensive din osaur. MR. D. ORCHARD: Before we leave this topic, Mr . Chairman, I would like to table a letter to Mr. Holland that both the Min ister and myself received a copy of. I think some of the questions in here are ones that, no doubt, the board and the management of MTS and, hopefully, the Min ister are currently wres tling with.

Although the letter was dated June 1st, I wouldn't expect an answer immed iately, but I am anxious to see the answer to the questions that are posed by Mr . Ha rrison from Harrison and Nowell, a mobile radio service retailer in the Province of Manitoba. Mr . Holland, we got briefly last session into the Jobs Fund and the capital construction budget. Is there any funding that MTS is currently avai ling the system of from the Jobs Fund? MR. G. HOLLAND: Mr . Chairman, not to my knowledge. MR. D. HOLLAND: One other subje ct which probably there isn't time enough for, but we will j ust deal with it briefly.

The cable industry in Winnip eg has been negotiating with the Telephone System for several years, I suppose. Are negotiations nearing completion on the renewal of their contract with MTS to carry televisions signals on the coax cable system in the City of Winnipeg? MR. G. HOLLAND: Mr. Chairman, one of our customers east of the Red River had launched two court actions which just recently have been withdrawn, and our respective counsels will be guiding us on how we proceed full out with negotiations. Our negotiations with our customer west of the Red River continue as recently as this week.

The proposal is that the remaining differences should be referred to the Public Utiliti es Board for arbitration. MR. D. ORCHARD: Are the contra cts with Manitoba Telephone System renewed for the provision of coaxial cable space or spectrum in the City of Winnip eg with the two companies? Are cont racts renewed - I under stand the first one was a 15-year contract -is it renewed or in the process of being renewed to allow them to comply with the requirements of their CRTC licence? MR. G. HOLLAND: The negotiations to which I referred are for a 15-year agreement replacing the 1967 agreement.

MTS has served notice of termination in May, 1984 of the 1967 agreement. MR. D. ORCHARD: Now when you served notice o' termination, was there a particular reason why you chose to do that, Mr . Holland? MR. G. HOLLAND: Yes, Mr . Chairman. The terms and conditions which were negotiated in 1965, although they have been beneficial both to the customer and MTS, are quite unsuitable to the next era when both plants will face major upgrades; when a variety of new 146 services are coming on; and so that the contracts for service requir ed upgrading.

I believe there was general agreement to that effect as early as 198 1 that such replacement would be necessary. MR. D. ORCHARD: Then I wouldn't be able to interpr et that the system has no intention of renewing the contract with those companies by the fact that you've cancelled as of May, 1984. Yo ur intention is to renew with the two companies, I assume. MR. G. HOLLAND: Mr . Chairman, our prin ciple customers on those networks are the cable operators.

We 're extremely anxious to develop mutually acceptable agreements; we'r e attempting to reflect their requi rements, under their terms of licensure where that's possible and where it meets Manitoba policy so we are very anxious to see them negotiated and enacted. MR. D. ORCHARD: Mr. Chairman, could I ask the general manager, Mr . Holland, as to what input the Manitoba Telephone System had to amend ments contained in Bill 78,

An Act to amend The Manitoba Telephone Act? MR. G. HOLLAND: Mr . Chairman, MTS provided the Min ister with quite a number of circums tances and situations with alternatives for his consideration. Are there any particular aspects that Mr . Orchard is . . . MR. D. ORCHARD: I guess a simple question would be, amongst the proposals which were made to the Min ister for his consideration, are any or all of those proposals contained within Bill 78? HON. J.

PLOHMAN: The proposals in Bill 78 have been developed as a result of consultation with the Telephone System with the Department of Communications and with the Legislative Counsel, Mr . Rae Tallin. MR. D. ORCHARD: I wonder if Mr. Holland might answer my last question. MR. G. HOLLAND: Could I ask the question to be repeated? MR. D. ORCHARD: Amongst the proposals made to the Minis ter by the System, are any or all of those proposals contained within Bill 78? MR. G. HOLLAND: Mr. Chairman, the proposals that have been made to the Minis ter are remarkably similar to those that were made to my former Min ister.

This has partly been covered by Mr. Mil ler. MTS is seeking to preserve the telecommunications aspects and its common carrier status such that all customers can be served. This has been done, I think, in an evolutiona ry fashion, taken into account changes, for instance, we do allow interconnection of priv ately-owned mobi les and pagers; we do not provide any alarming services; tho se are all handled by private busin ess. Television is provided entirely by business. We allow data terminals to interconnect. So the proposals generally are intended to preserve the telecommunications component of the

Thursday, 14 July, 1983 great variety of services that are coming on the networks. MR. D. ORCHARD: Well, Mr . Chairman, I think if Mr . Holland could provide me with answers to several of the questions that had come up this morning, and depending on whether my information is correct or not, I can take those up with the Min ister at a later date. I think we could probably pass the report right now if no one else had any other questions. MR. CHAIRMAN: Any further questions for members of the committee? 147 The question before the commit tee is the Annual Report of the Manitoba Telephone System for 1981- 82.

How do you wish to proceed, page-by-page, or report-by-report? Report-pass. Thank you, gentlemen, that concludes the busi ness before the commit tee this morning. The only busi ness stan ding before this commit tee for the dur ation is the Report of Manitoba Hydro. I expect committee members will be advised when that commit tee meeting is to be called. Thank you gentlemen. I'll entertain a motion commi ttee adjourn. Commit tee adjourned, so ordered.